Chicago pushes no coal in electricity contract

The city of Chicago is hoping to clean up its power supply — and Midwestern skies — in one fell swoop via the mammoth contract it's negotiating to provide electricity to more than 900,000 households and small businesses.

In a first-of-its-kind requirement, bidders are being required to specify the percentage of each power source they plan to use to meet Chicago's electricity needs. The goal, says a member of an advisory committee assessing the bids, is to burn little or no coal, a major source of urban smog and greenhouse gases tied to global warming. Coal currently accounts for about 40 percent of the power Chicagoans consume.

“I think the city is interested in reducing or eliminating coal from its fuel supply,” said Jack Darin, executive director of the Sierra Club's Illinois chapter and a member of Mayor Rahm Emanuel's four-person advisory committee on the procurement. “And we'll see how the market responds.”

The city is expected to reveal its chosen supplier or suppliers as early as Friday. The City Council's Finance Committee will review the proposed deal at a hearing on Monday, and the full council is expected to vote on it next week. The Emanuel administration has said that buying power from a source other than Commonwealth Edison Co. could reduce bills by 10 percent.

A spokeswoman for the mayor said eight companies responded to the city's request for qualifications. A smaller, undisclosed number were cleared to bid, she said. Among the companies confirming they had been approved to bid were local players Exelon Corp., owner of retail supplier Constellation, and Integrys Energy Services, sister company of Chicago's natural gas utility Peoples Gas Co.

The city is going well beyond the green efforts of the 150-plus suburbs that already have reduced their residents' electric bills by buying in bulk on their behalf. Many of those have negotiated “100 percent green” deals, but that has meant that suppliers have purchased cheap paper certificates from renewable power-plant owners anywhere in the country. Those certificates represent small, incremental revenue sources for the green-power developers, who sell the power their facilities generate into their local power grids.

Chicago is going several steps further in demanding that would-be suppliers disclose where the actual power they're purchasing on Chicagoans' behalf is coming from.

Mr. Darin emphasized that obtaining the best price possible for its residents remains the city's top priority. “The hope is that Chicago is going to be able to get the best deal and meet their green goals,” he said.

He and other environmental advocates say they hope the city's move to force suppliers to use greener power sources will start a trend. Many suburbs that negotiated contracts last year and earlier this year will be soliciting bids as early as 2013.

“As contracts begin to roll off in 2013 and 2014 and the ability to achieve large savings will be less obvious, there will be more emphasis on creating value and (supporting) the cleaner power the public says it wants,” predicted Howard Learner, executive director of the Environmental Law and Policy Center in Chicago.

The city's desire for a low- or no-coal power deal follows Mr. Emanuel's agreement earlier this year with coal-plant owner Midwest Generation LLC to shutter two old coal plants on the Southwest Side that environmentalists had targeted for years.

Particularly well-suited to meet the city's goals will be Constellation. Parent Exelon owns six nuclear power plants in Illinois, as well as a wind farm and the country's largest urban solar farm in Chicago. Those nukes, built decades ago by Exelon-owned ComEd, meet the majority of the city's power needs today.

To date, Constellation has lost out in the bidding for most of the suburbs that have bought power in bulk to Akron, Ohio-based FirstEnergy Solutions, which has consistently undercut it on price.

But leading up to the city's high-profile bid, a consortium of local green groups dubbed the Clean Power Coalition wrote a letter to the mayor urging him not to choose FirstEnergy. They wrote that FirstEnergy's parent, which owns utilities and power plants in Ohio, had lobbied for state legislation that would “roll back” energy efficiency standards there.

“Companies that are not willing to offer strong energy efficiency programs should not be permitted to be the energy providers for Chicago,” the group wrote in its Nov. 28 letter. “Moreover, companies that attempt to undercut existing energy efficiency programs in other states cannot be trusted partners for the city of Chicago.”

In response, a FirstEnergy spokeswoman emailed: “FirstEnergy Corp. was not asking for energy efficiency mandates to be 'rolled back.' The company was interested in having legislators in Ohio take another look at the mandates in light of the local economy. That request has been tabled at this time, but the company will continue to follow this — as we do with any issue that affects our customers.”

She emphasized that FirstEnergy had 500 megawatts of wind power under long-term contracts, making it one of the largest renewable energy providers in the Midwest.